The Euro US Dollar (EUR USD) exchange rate has fallen back slightly this afternoon as investors react to the minutes from the European Central Bank’s (ECB) latest policy meeting.
Euro (EUR) Dips as ECB Remain Wary about Strength of Single Currency
The Euro weakened this afternoon as the ECB expressed concerns about the recent strength of the single currency, as it may hamper the bank’s attempts to raise inflation.
However despite concerns over the recent appreciation of the Euro policymakers still appeared to be confident enough to open the debate on tapering its stimulus programme, a key move in the bank’s roadmap for raising interest rates.
Investors remain sceptical however over the bank’s plans as policy makers appear to adopting a very cautious approach to any potential tightening of the ECB monetary policy, with the accounts reading;
‘Any reassessment of the monetary policy stance should proceed in a very gradual and cautious manner, while maintaining sufficient flexibility.’
US Dollar (USD) Strengthened by Better Than Expected Service PMI
Meanwhile the US Dollar remained strengthened today by the release of the latest US services PMI on Wednesday.
According to data published by the Institute for Supply Management (ISM), activity in the US service sector saw a sharp rise in September, with the index rocketing up from 55.3 to 59.8, sailing past expectations it would only reach 55.5 and reaching a new 13-year high.
Making the data all the more impressive is that the rise in activity came despite the disruptions caused to the US economy by both Hurricanes Harvey and Irma at the start of the month.
Anthony Nieves, chair of the ISM, said;
‘The non-manufacturing sector has reflected strong growth in the month of September despite the impact on the supply chain from the recent hurricanes. Respondents’ comments indicate a good outlook for business conditions.’
EUR USD Forecast: US Trade Deficit to Shrink?
Looking ahead the EUR USD exchange rate may slide later this afternoon as the US releases its latest Trade Balance figures, with economists forecasting that the country’s trade deficit may have narrowed slightly from $43.7bn to $42.7bn in August.
Meanwhile the Euro may advance tomorrow morning as Germany’s publishes its Factory Order figures for August as analysts predict that order will have rebounded to 0.7% after slumping to -0.7% in July.
Current Interbank Exchange Rates
At the time of writing the EUR USD exchange rate was trending around 1.1743 and the USD EUR exchange rate was trending around 0.8513.
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